Initial jobless claims jump 38,000 to 368,000

Number of people applying for benefits back to late 2012 levels

WASHINGTON (MarketWatch) — The number of people who applied for new unemployment benefits last week bounced sharply higher, erasing a big drop earlier in the month that put U.S. claims at a five-year low but likely stemmed from seasonal quirks.

Initial jobless claims jumped 38,000 to a seasonally adjusted 368,000 in the week ended Jan. 26, according to Labor Department data released Thursday. That’s the highest level in one month and marks the biggest increase since the week after superstorm Sandy.

The gap between actual and seasonally adjusted jobless claims tends to widen sharply from Thanksgiving to mid-January.

Economists surveyed by MarketWatch had expected claims — a rough gauge of layoffs — to climb to 355,000. Initial claims from two weeks ago were unrevised at 330,000.

New claims returned to a level that prevailed through the second half of 2012 after having touched a five-year low earlier this month.

“The recent gyrations in claims are likely a result of seasonal distortions in the beginning of the year,” said economist Yelena Shulyatyeva at BNP Paribas.

The claims report had little impact on U.S. markets. The Dow
DJIA, -0.32%
rose slightly in recent action.

Claims are often jumpy in January after companies let go of holiday hires and some people wait until the new year to file for benefits. Government statisticians try to adjust the weekly data to account for seasonal variations but it’s a tricky thing to get right.

For that reason economists often discount the weekly claims report until the end of the month, when seasonal distortions begin to fade.

The upshot: the state of play in the U.S. labor market is little changed. The economy continues to add jobs at a pace of around 150,000 a month, slowly reducing an unemployment rate that stood at 7.8% at the end of 2012.

The latest monthly report on hiring, the January employment report, will be issued Friday. The economy likely added about 168,000 jobs, the MarketWatch survey shows, with the unemployment rate likely to hold steady.

The average of new claims over the past month, meanwhile, edged up by 250 to 352,000 but remained near a five-year low. The four-week average reduces seasonal volatility in the weekly data and is seen as a more accurate barometer of labor-market trends.

Also, the Labor Department said, continuing claims increased by 22,000 to a seasonally adjusted 3.2 million in the week ended Jan. 19. Continuing claims reflect the number of people already receiving benefits.

About 5.9 million people received some kind of state or federal benefit in the week ended Jan. 12, up 255,501 from the prior week. Total claims are reported with a two-week lag.

In a separate report Thursday, the Commerce Department said consumer spending rose 0.2% in December while income surged 2.6%. The jump in income stemmed largely from a wave of onetime dividend payouts made by corporations in December to avoid a tax increase in January. Read about jump in U.S. incomes.

In the fourth quarter, meanwhile, U.S. employment costs rose a modest 0.5%, the Labor Department said Thursday. For all of 2012 employment costs climbed 1.9%, down from 2.0% in 2011. Read about labor costs.

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